IGCSE

Chapter 8

Money and Finance

Currency conversions In 2017, 1 euro (€) could be exchanged for1.50 Australian dollars (A$).

Example 1: How many Australian dollars can be bought for€400?

€1 buys A$1.50.

€400 buys 1.50 × 400 = A$600.

Example 2: How much does it cost to buy A$940?

A$1.50 costs €1.

A$940 costs 1×940

1.5=€626.67.

Earnings

Net pay is what is left after deductions such as

tax, insurance and pension contributions are

taken from gross earnings.

Net pay = Gross pay – Deductions

A bonus is an extra payment sometimes added

to an employee’s basic pay.

In many companies there is a fixed number of

hours that an employee is expected to work.

Any work done in excess of this basic week is

paid at a higher rate, referred to as overtime.

Overtime may be 1.5 times basic pay, called

time and a half, or twice basic pay, called

double time.

Piece work is another method of payment.

Employees are paid for the number of articles

made, not for the time taken.

Example 3: Maria is paid €5 for every 12 plates that she makes.

This is her record for one week. How much is she

paid?

Mon 240

Tues 360

Wed 288

Thurs 192

Fri 180

240 + 360 + 288 + 192 + 180 =

= 1260

1260: 12 = 105

105 × 5 = 525

Example 4: a. Miss Martinez works 38 hours for an hourly rate

of $4.15. In addition she work 6 hours of overtime

at time and a half. What is her total gross pay?

b Deductions amount to 32% of her total gross pay.

What is her net pay?

38 × 4.15 =

4.15 × 1.5 =

= 6.225 hourly rate of overtime

= $157.7 basic pay

6 × 6.225 = 37.35 overtime pay

157.7 + 37.35 = 195.05 gross pay

Example 4: a. Miss Martinez works 38 hours for an hourly rate

of $4.15. In addition she work 6 hours of overtime

at time and a half. What is her total gross pay?

b Deductions amount to 32% of her total gross pay.

What is her net pay?

195.05 ×32

100=

195.05 − 62.416 =

= 132.634 net pay

= $62.416 deductions

Profit and loss

Foodstuffs and manufactured goods are

produced at a cost, known as the cost price,

and sold at the selling price. If the selling price

is greater than the cost price, a profit is made.

Example 5: A market trader buys oranges in boxes of 12 dozen

for $14.40 per box. He buy three boxes and sells all

the oranges for 12c each. What is his profit or loss?

3 × $14.40 =

= $43.20 cost price

12 × 12 == 144 oranges of per box

3 × 144 × 12𝑐 =

= $51.84 selling price

51.84 − 43.20 =

= $8.64 profit

Sometimes, particularly during sales or

promotions, the selling price is reduced; this is

known as a discount.

Example 6: In a sale, a skirt usually costing $35 is sold at a

15% discount. What is the discount?

$35 ×15

100=

= $5.25 discount

Percentage profit and loss

Most profits or losses are expressed as a

percentage.

Profit or loss, divided by cost price, multiplied

by 100 = % profit or loss.

Example 7: A woman buys a car for $7500 and sells it two

years later for $4500. Calculate her loss over two

years as a percentage of the cost price.

Cost price = $7500

Loss = $3000

3000

7500× 100 =

Selling price = $4500= 40% loss

When something becomes worth less over a

period of time, it is said to depreciate.